IPO plans scrapped as GSPC re-invites KG block bids

Vol 11, PW 2 (31 May 07) People & Policy

GSPC has scrapped its shortlist of four potential investors drawn up by UBS Securities in favour of a wider bidding process for a stake in discovery block KG-OSN-2001/3.

PETROWATCH learns GSPC still plans to farm-out up to 30% of the block to a strategic investor but that the plans “have been modifiedâ€‌ and a decision taken to ignore the shortlist of Chevron, BG, BP and Eni. Instead, all 14 original contenders will be offered up-to-date data packages with test results of all the wells drilled so far and those still being tested.

“By mid-August we should have test results from KG#16 and KG#28,â€‌ says a GSPC source. These will be displayed online in a â€کvirtual dataroom’ within a month.

All 14 companies will be invited to “reconfirmâ€‌ their interest in the block. Anyone interested will be invited to submit bids by early November.

Why did GSPC decide to scrap the original shortlist prepared by UBS “Several companies asked us to review our decision during Vibrant Gujarat (trade fair in January 2007),â€‌ says a source. Shell, Total, ConocoPhillips, ExxonMobil and Anadarko were among the original group of 14 companies interested.

Some of them, notably Exxon, told GSPC they had been “unjustly excludedâ€‌ from the bidding process. Consequently, “It was decided to give them another chance.

â€‌ GSPC’s decision to re-open the process comes as it abandons plans to float an Initial Public Offering on the stock market to raise $1bn for its exploration and development programme. Under consideration now is a plan to raise money from Gujarat-government owned companies by issuing convertible debentures of up to Rs1500cr ($333m) that can later be converted to equity.

GSPC believes this will be a “hassle-freeâ€‌ route to raising money for its exploration and development programmes. “During an IPO investors are likely to ask many questions about the KG development plans for which GSPC might not have the answers right now,â€‌ we hear.

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